ACIT 28 (2), MUMBAI V. MILIND V DESHMUKH, MUMBAI

ITA 6460/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3056 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 10-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURBINDER SINGH
• Keywords: Bogus purchase; Accommodation entries
• Section: 133(6); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 6460/MUM./2019 ( ASSESSMENT YEAR : 20 09 10 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 28(2), MUMBAI . APPELLANT V/S MILIND V. DESHMUKH PLOT NO.R 478, TTC INDUSTRIAL AREA MIDC RABALE, NAVI MUMBAI 400 701 PAN AEWPD2450D . RESPONDENT REVENUE BY : SHRI GURBINDER SINGH ASSESSEE BY : SHRI ADITYA DATE OF HEARING 12 .0 5. 2021 DATE OF ORDER 02.06.2021 O R D E R PER S. RIFAUR RAHMAN, A.M. TH E CAPTIONED APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 30 TH JULY 2019, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 26 , MUMBAI, FOR THE ASSESSMENT YEAR 20 09 10 . 2. THE ISSUE RAISED IN THE PRESENT APPEAL RELATES TO PARTIAL RELIEF GRANTED BY LEARNED COMMISSIONER (APPEALS) IN RESPECT OF ADDITION MADE ON ACCOUNT OF NON GENUINE PURCHASES. 2 MILIND V. DESHMUKH 3. BRIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL . FOR THE ASSESSMENT YEAR UNDER C ONSIDERATION , THE ASSESSEE FILED HIS RETURN OF INCOME IN THE REGULAR COURSE . SUBSEQUENTLY, ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX AUTHORITIES THROUGH THE INVESTIGATION WING OF THE DEPARTMENT INDICATING THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES PROVIDED BY HAWALA OPERATORS THROUGH BOGUS PURCHASE BILLS, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER C ALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS OF PURCHASES WORTH ` 14,21,595, CLAIMED TO HAVE BEEN MADE DURING THE YEAR FROM FEW PARTIES . FURTHER, TO INDEPENDENTLY VERIFY THE GENUINENESS OF SUCH PURCHASES, THE ASSESSING OFFICER ISSUED NOTICE S UNDER SECTION 133(6) OF THE ACT TO THE SELLING DEALERS CALLING FOR CERTAIN INFORMATION. H OWEVER, ALL SUCH NOTI CES RETURNED BACK UNSERVED. FURTHER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EVIDENCES FURNISHED BY THE ASSESSEE TO ESTABLISH THE GENUIN ENESS OF PURCHASES. THUS, ULTIMATELY, THE ASSESSING OFFICER DISALLOWED THE ENTIRE AMOUNT OF ` 14,21,595 , AND ADDED IT TO THE INCOME OF THE ASSESSEE. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF F ACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) 3 MILIND V. DESHMUKH RESTRICTED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TO 12.5% OF THE ALLEGED NON GENUINE PURCHASES. 5. THE LEARNED DEPARTMENTAL AUTHORITIES SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN DIRECTING THE ASSES SING OFFICER TO RESTRICT THE ADDITION OR BOGUS PURCHASE TO 12.5% AS AGAINST 100% ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASE WITHOUT APPRECIATING THE FACT THAT THE PARTIES FROM WHOM THESE PURCHASES WERE MADE PROVEN ACCOMMODATION ENT RY PROVIDERS AS CONCLUDED BY THE SALES TAX AUTHORITIES PURSUANT TO THE INVESTIGATION CARRIED OUT BY THEM. HE SUBMITTED THAT THE LEARNED COMMISSIONER (APPEALS) HAS NOT CONSIDERED THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN N.K. PROTEINS LTD. V/ S DCIT, 769/2017, JUDGMENT DATED 16 TH JANUARY 2017, WHEREIN THE HON'BLE SUPREME COURT HAS CONFIRMED 100% ADDITION MADE ON ACCOUNT OF BOGUS PURCHASE. 6. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE OBSERVATIONS OF THE LEARNED COMMISSIONER (APPEALS). 7. C ONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DECISION RELIED UPON BY THE REVENUE. WE FIND THAT , THOUGH , THE ASSESSEE MAY NOT HAVE BEEN ABLE TO PROVE THE GENUINENESS OF PURCHASES FROM THE DECLARED SOURCE, HOWEVER, IT IS A FACT ON RECORD THAT THE ASSESSING OFFICER HAS NOT DISPUTE D THE SALE S 4 MILIND V. DESHMUKH EFFECTED BY THE ASSESSEE. THEREFORE, IT GOES TO PROVE THAT THE ASSESSEE MUST HAVE PURCHASED GOODS FROM SOME OTHER UNDISCLOSED SOURCE. IN SUCH CIRCUMSTANCES, IT IS THE SETTLED LEGAL POS ITION THAT THE ENTIRE PURCHASES CANNOT BE DISALLOWED, BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE CONSIDERED FOR ADDITION. THEREFORE, KEEPING IN VIEW THE DECISION S OF THE TRIBUNAL IN IDENTICAL NATURE OF CAS ES, THE DECISION OF LEARNED COMM ISSIONER (APPEALS) TO RESTRICT THE DISALLOWANCE TO 12.5% OF THE NON GENUINE PURCHASE IS FAIR AND REASONABLE WARRANTING NO INTERFERENCE FROM THIS FORUM. ACCORD INGLY, WE UPHOLD THE ORDER OF LEARNED COMMISSIONER (APPEALS) BY DISMISSING THE GROUNDS RAISED BY T HE REVENUE. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.06.2021 SD/ - PAVAN KUMAR GADALE JUDICIAL MEMBER SD/ - S. RIFAUR RAHMAN ACCOUNTANT MEMBER MUMBAI, DATED: 02.06.2021 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI